BURLINGTON, Mass., Nov. 28, 2017 (GLOBE NEWSWIRE) — Nuance Communications, Inc. (NASDAQ:NUAN) today announced financial results for its fiscal 2017 and fourth quarter, ended September 30, 2017. Nuance delivered a strong fourth quarter and ended fiscal 2017 with solid performance in net new bookings and recurring revenue driven by demand for its Dragon Medical cloud solution, Enterprise, specifically voice biometrics and omni-channel and digital offerings, and clinical documentation improvement solutions.
Fourth Quarter of Fiscal 2017 Performance
Nuance reported GAAP revenue of $465.9 million for the fourth quarter, compared to $506.2 million a year ago. Fourth quarter non?GAAP revenue was $474.7 million, which includes revenue lost to accounting treatment in conjunction with acquisitions, compared to $512.4 million in the fourth quarter of fiscal 2016. In the fourth quarter, total recurring revenue represented 71% of total revenue on a GAAP and non-GAAP basis, up 100 basis points from a year ago. Nuance reported net new bookings for the fourth quarter of $424.4 million, down 18% from $516.9 million a year ago.
Nuance reported GAAP net loss of $(65.4) million for the fourth quarter, or $(0.23) per share, compared to GAAP net income of $18.5 million, or $0.06 per diluted share, in the fourth quarter of fiscal 2016. Non-GAAP net income was $60.2 million, or $0.20 per diluted share, down from non-GAAP net income of $90.7 million, or $0.31 per diluted share, in the fourth quarter of fiscal 2016. Nuance’s GAAP operating margin for the quarter was (3.8)%, down from 9.0% in the fourth quarter of fiscal 2016. Fourth quarter non?GAAP operating margin was 20.7%, down from 29.9% in the fourth quarter of fiscal 2016. Cash flow from operations was $(3.5) million in the fourth quarter of fiscal 2017, down from $138.9 million in the fourth quarter of fiscal 2016.
The company estimates that the malware incident had an impact of approximately $(53.0) million on GAAP and non-GAAP revenues in the fourth quarter. The company estimates the effect of the incident on fiscal fourth quarter GAAP earnings per share was approximately $(0.19) and non-GAAP earnings per share was approximately $(0.11).
“Nuance delivered strong year-over-year net new bookings growth in FY17 of 10% and saw solid performance across revenue and earnings in the fourth quarter driven by momentum for our most advanced solutions,” said Dan Tempesta, Nuance’s CFO. “We expect our leadership in conversational AI to continue to attract customers to our growth business offerings in FY18 and beyond.”
Fiscal Year 2017 Performance
In fiscal 2017, Nuance reported GAAP revenue of $1,939.4 million, down from $1,948.9 million in fiscal 2016. Nuance reported non-GAAP revenue of $1,977.4 million, which includes revenue lost to accounting treatment in conjunction with acquisitions, down from non-GAAP revenue of $1,979.6 million in fiscal 2016. In fiscal 2017, GAAP and non-GAAP total recurring revenue represented 73% of total revenue, compared to 70% in fiscal 2016, on both a GAAP and non-GAAP basis. In fiscal 2017, Nuance reported net new bookings of $1,653.6 million, up 10% from $1,502.3 million in fiscal 2016.
In fiscal 2017, Nuance recognized GAAP net loss of $(151.0) million, or $(0.52) per share, compared to GAAP net loss of $(12.5) million, or $(0.04) per share, in fiscal 2016. In fiscal 2017, Nuance reported non-GAAP net income of $309.0 million, or $1.05 per diluted share, compared to $343.4 million, or $1.15 per diluted share, in fiscal 2016. Nuance’s fiscal 2017 GAAP operating margin was 2.7%, down from 7.1% in fiscal 2016. Nuance’s fiscal 2017 non-GAAP operating margin was 26.4%, compared to 28.5% in fiscal 2016. Nuance reported cash flow from operations of $378.9 million in fiscal 2017, compared to $565.8 million in fiscal 2016. Nuance ended fiscal 2017 with total deferred revenue of $790.0 million, up 7% compared to $736.1 million a year ago. Nuance ended fiscal 2017 with $874.1 million in cash, cash equivalents and marketable securities.
The company estimates that in fiscal 2017 the malware incident had an impact of approximately $(68.0) million on GAAP and non-GAAP revenues. The company estimates the effect of the incident on fiscal 2017 GAAP earnings per share was approximately $(0.25) and non-GAAP earnings per share was approximately $(0.13).
The company’s estimate for revenue impacts was primarily based on production downtime of its HIM services as well as credits and concessions issued to HIM customers which are netted against revenue. Nuance’s estimate for cost and margin impacts primarily included (i) additional cost of sales that would have been incurred related to production downtime of HIM services, (ii) the exclusion of actual expenses incurred for incident-related professional services, software and systems, as well as assets that were impaired or for which depreciation was accelerated, and (iii) additional costs related to employee bonus and stock compensation that would have been incurred, as the company’s performance would have been improved. Nuance’s estimate for earnings per share impacts includes the adjustments noted above as well as the corresponding tax effect of those adjustments.
Guidance and Business Outlook
For a full discussion on Nuance’s guidance and business outlook, please see pages 12-15 of the Company’s Prepared Remarks document available at http://www.nuance.com/earnings-results/
Please refer to the “Discussion of Non-GAAP Financial Measures,” “GAAP to Non-GAAP Reconciliations,” and “Pro Forma Financial Measures” included elsewhere in this release, for more information regarding the company’s use of non-GAAP and pro forma measures.
Conference Call and Prepared Remarks
Nuance is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide shareholders and analysts with additional time and detail for analyzing results in advance of the company’s quarterly conference call. The remarks will be available at http://www.nuance.com/earnings-results/ in conjunction with the press release.
Nuance will host an investor conference call today that will begin at 5:00 p.m. ET and will include only brief comments followed by questions and answers. To access the live broadcast, please visit the Investor Relations section of Nuance’s website at http://investors.nuance.com. The call can also be heard by dialing 800-553-5275 or 612-332-0725 at least five minutes prior to the call and referencing code 430782. A replay will be available within 24 hours of the announcement by dialing 800-475-6701 or 320-365-3844 and using the access code 430782.
About Nuance Communications, Inc.
Nuance Communications, Inc. (NASDAQ:NUAN) is a leading provider of voice and language solutions for businesses and consumers around the world. Its technologies, applications and services make the user experience more compelling by transforming the way people interact with devices and systems. Every day, millions of users and thousands of businesses experience Nuance’s proven applications. For more information, please visit www.nuance.com.
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